Zeilinger Products, Inc., has a Screen Division that manufactures and sells a number of products,...
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Accounting
Zeilinger Products, Inc., has a Screen Division that manufactures and sells a number of products, including a standard screen that could be used by another division in the company, the Home Security Division, in one of its products. Data concerning that screen appear below:
Capacity in units
40,000
Selling price to outside customers
$
65
Variable cost per unit
$
28
Fixed cost per unit (based on capacity)
$
26
The Home Security Division is currently purchasing 8,000 of these screens per year from an overseas supplier at a cost of $58 per screen.
What is the maximum price that the Home Security Division should be willing to pay for screens transferred from the Screen Division?
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